What is a Lottery?

A lottery is a gambling game in which people pay a small amount of money for the chance to win a larger sum. The prizes are allocated by a process that relies wholly on chance. It is a common form of fundraising for public projects, and it has gained increasing popularity in the United States since the nineteen sixties. At that time, the financial prosperity which had characterized American society throughout much of its history came to an end, and state governments found it increasingly difficult to balance their budgets without raising taxes or cutting services.

The first lottery in the United States was established in New Hampshire in 1964. Inspired by its success, New York followed shortly, and by the end of the decade ten more states had introduced lotteries. In the United States, all lotteries are run by the state governments that authorize them; they are monopolies that do not allow commercial or private lotteries to compete with them. State officials advertise the games and sell tickets through a network of retailers, who are paid commissions on their sales. Retailers also receive demographic data from the state, which they can use to optimize their merchandising and advertising.

The state governments which operate lotteries owe their popularity to the degree that they can convince the public that the proceeds will be used for a public good. This argument is particularly persuasive in times of economic stress, but studies have shown that the objective fiscal circumstances of a state do not appear to have much influence on whether or when it adopts a lottery.